House Hearing, 108TH Congress - H.R. 1329, Recreational Marine Employment Act of 2003

H.R.
1329,
RECREATIONAL
MARINE EMPLOYMENT ACT
OF 2003
HEARING
BEFORE THE
SUBCOMMITTEE ON WORKFORCE PROTECTIONS

OF THE
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
July 15, 2004
Serial No. 108-69
Printed for the use of the Committee on Education and the Workforce
(
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
or
Committee address: http://edworkforce.house.gov
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94-935 PDF
2004
For sale by the Superintendent of Documents, U.S. Government Printing Office

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COMMITTEE ON EDUCATION AND THE WORKFORCE

JOHN A. BOEHNER, Ohio, Chairman
Thomas E. Petri, Wisconsin, Vice Chairman
Cass Ballenger, North Carolina
Peter Hoekstra, Michigan
Howard P. Buck McKeon, California
Michael N. Castle, Delaware
Sam Johnson, Texas
James C. Greenwood, Pennsylvania
Charlie Norwood, Georgia
Fred Upton, Michigan
Vernon J. Ehlers, Michigan
Jim DeMint, South Carolina
Johnny Isakson, Georgia
Judy Biggert, Illinois
Todd Russell Platts, Pennsylvania
Patrick J. Tiberi, Ohio
Ric Keller, Florida
Tom Osborne, Nebraska
Joe Wilson, South Carolina
Tom Cole, Oklahoma
Jon C. Porter, Nevada
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia
George Miller, California

Dale E. Kildee, Michigan
Major R. Owens, New York
Donald M. Payne, New Jersey
Robert E. Andrews, New Jersey
Lynn C. Woolsey, California
Ruben Hinojosa, Texas
Carolyn McCarthy, New York
John F. Tierney, Massachusetts
Ron Kind, Wisconsin
Dennis J. Kucinich, Ohio
David Wu, Oregon
Rush D. Holt, New Jersey
Susan A. Davis, California
Betty McCollum, Minnesota
Danny K. Davis, Illinois
Ed Case, Hawaii
Raul M. Grijalva, Arizona
Denise L. Majette, Georgia
Chris Van Hollen, Maryland
Tim Ryan, Ohio
Timothy H. Bishop, New York
Paula Nowakowski, Staff Director

John Lawrence, Minority Staff Director
SUBCOMMITTEE ON WORKFORCE PROTECTIONS

CHARLIE NORWOOD, Georgia, Chairman
Judy Biggert, Illinois, Vice Chairman
Cass Ballenger, North Carolina
Peter Hoekstra, Michigan
Johnny Isakson, Georgia
Ric Keller, Florida
John Kline, Minnesota
Marsha Blackburn, Tennessee
John A. Boehner, Ohio, ex officio
Major R. Owens, New York

Dennis J. Kucinich, Ohio
Lynn C. Woolsey, California
Denise L. Majette, Georgia
Donald M. Payne, New Jersey
Timothy H. Bishop, New York
George Miller, California, ex officio
(II)
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C O N T E N T S
Page
Hearing held on July 15, 2004 ...............................................................................

Statement of Members:
Biggert, Hon. Judy, Vice-Chairman, Subcommittee on Workforce Protections, Committee on Education and the Workforce ...................................
Prepared statement of ...............................................................................
Keller, Hon. Ric, a Representative in Congress from the State of Florida ..
Kucinich, Hon. Dennis J., a Representative in Congress from the State
of Ohio, prepared statement of ....................................................................
Owens, Hon. Major R., Ranking Member, Subcommittee on Workforce
Protections, Committee on Education and the Workforce .........................
Statement of Witnesses:
Greenway, Ian R., LIG Managers, Inc., St. Petersburg, FL, ........................
Hebert, Kristina, Vice President of Operations, Wards Marine Electric,
Inc., Ft. Lauderdale, FL ...............................................................................
McGarrah, Robert E., Jr., Coordinator for Workers Compensation, AFLCIO, Washington, DC ...................................................................................
Nelson, Larry, Vice President, Administration, Westport Shipyard, Inc.,
Westport, WA ................................................................................................
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(III)
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H.R. 1329, RECREATIONAL MARINE

EMPLOYMENT ACT OF 2003
Thursday, July 15, 2004
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
Washington, DC
The Subcommittee met, pursuant to notice, at 10:10 a.m., in

room 2175, Rayburn House Office Building, Hon. Judy Biggert
[Vice-Chairman of the Subcommittee] presiding.
Present: Representatives Biggert, Keller, Kline, Owens, and
Payne.
Ex officio present: Representative Miller.
Staff Present: Stacey Dion, Professional Staff Member; Kevin
Frank, Professional Staff Member; Danielle English, Professional
Staff Member; Ed Gilroy, Director of Workforce Policy; Richard
Hoar, Staff Assistant; Don McIntosh, Staff Assistant; Molly
McLaughlin Salmi, Deputy Director of Workforce Policy; Deborah
L. Samantar, Committee Clerk/Intern Coordinator; Kevin Smith,
Communications Advisor; Jo-Marie St. Martin, General Counsel;
Jody Calemine, Minority Counsel Employer-Employee Relations;
Margo Hennigan, Minority Legislative Assistant; John Lawrence,
Minority Staff Director; Marsha Renwanz, Minority Legislative Associate; Peter Rutledge, Minority Senior Legislative Associate/
Labor; and Mark Zuckerman, Minority General Counsel.
Vice-Chairman BIGGERT. Good morning. The Subcommittee on
Workforce Protections of the Committee on Education and the
Workforce will come to order.
We are meeting here today to hear testimony on H.R. 1329, the
Recreational Marine Employment Act of 2003. Under Committee
rule 12(b), opening statements are limited to the Chairman and
Ranking Minority Member of the Subcommittee. Therefore, if other
Members have statements they may be included in the hearing
record. I ask for unanimous consent for the hearing to remain open
for 14-days to allow Members statements and other extraneous materials referenced during the hearing to be submitted in the official
hearing record. Without objection, so ordered.
(1)
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STATEMENT OF HON. JUDY BIGGERT, VICE-CHAIRMAN, SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE
ON EDUCATION AND THE WORKFORCE
The focus of todays hearing is H.R. 1329, the Recreational Marine Employment Act of 2003, a bill introduced by our colleague on
the Subcommittee, Representative Keller. The bill will amend the
Longshore and Harbor Workers Compensation Act to exempt the
Recreational Marine Industry from coverage under the Act.
The last time Congress addressed Longshore and Harbor Workers Compensation was 1984. At that time, Congress determined
that the individuals who build and service vessels 65 feet and
under should not be covered by Longshore coverage, but protected
under their State workers compensation plan.
In the 20 years since Congress last addressed this issue, the recreational industry has changed dramatically. Americans want everything larger, from their vehicles to fast food and boats are no
exception. Today, we ask, what was the size limitation that was
placed in statute over 20 years ago, and appropriate to continue to
allow the recreational industry to grow and compete.
The practical impact of this limitation has been for thousands of
jobs to be lost to other countries because of the increased costs of
doing business here at home.
Our witnesses today will share their perspectives on the economic conditions of the industry today. I would like to thank them
for taking time out of their busy schedule to provide the Subcommittee members with their expertise and opinions on the legislation.
And I will yield the remainder of my time to my colleague from
Florida, and the sponsor of H.R. 1329, Mr. Keller.
[The prepared statement of Vice-Chairman Biggert follows:]
Statement of Hon. Judy Biggert, Vice-Chairman, Subcommittee on
Workforce Protections, Committee on Education and the Workforce
The focus of todays hearing is H.R. 1329, the Recreational Marine Employment
Act of 2003, a bill introduced by our colleague on the Subcommittee, Representative
Keller. The bill would amend the Longshore and Harbor Workers Compensation Act
to exempt the recreational marine industry from coverage under the Act.
The last time Congress addressed Longshore and Harbor Workers Compensation
was 1984. At that time, Congress determined that the individuals that build and
service vessels 65 feet and under should not be covered by Longshore coverage but
protected under their state workers compensation plan. In the 20 years since Congress last addressed this issue the recreational industry has changed dramatically.
Americans want everything larger nowfrom their vehicles to fast food, and boats
are no exception. Today we ask, was the size limitation that was placed in statute
over 20 years ago an appropriate to continue to allow the recreational industry to
grow and compete? The practical impact of this limitation has been for thousands
of jobs to be lost to other countries because of the increased cost of doing business
here at home.
Our witnesses here today will share their perspectives on the economic condition
of the industry today. I would like to thank them for taking time out of their busy
schedules to provide the Subcommittee members with their expertise and opinions
on the legislation.
At this time, I would like to turn over my remaining time to the sponsor of the
legislation and my good friend from Florida, Mr. Keller.
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STATEMENT OF HON. RIC KELLER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. KELLER. Well, thank you, Madam Chairman. And I want to

especially thank our witnesses for being here today, two of whom,
I see, are fellow Floridians. Welcome to all of you.
Let me begin by telling you the story of how I became interested
in creating thousands of jobs in the recreational marine industry.
A group of folks who work in the recreational marine industry in
Florida came to my Orlando office. One built recreational boats.
Another repaired recreational boats. And a third ran a marina.
They all had something in common. All of them operated small,
family owned businesses. All of them wanted to hire more employees, and expand their businesses. And all of them had one problem.
That is, all of them were forced to pay unnecessary and exorbitant
insurance premiums under the Longshore and Harbor Workers
Compensation Act.
Specifically, I learned that while workers in the recreational marine industry should be covered under the State workers compensation laws, these employers, because of the legal technicality,
were being forced to pay for Longshore insurance, which was three
times more expensive than workers compensation insurance in
Florida. They showed me a recent survey, which indicated that employers in the recreational marine industry would save an average
of $99,000 per year if they were exempt from the Longshore Act,
and that 95 percent of those employers said they would use the
savings to create additional jobs. They told me that many jobs were
being outsourced to the Bahamas, Canada and China, where their
competitors didnt have to pay the Longshore insurance.
I told them that this was unacceptable, and I decided to file the
Recreational Marine Employment Act. To put this hearing in perspective, let me briefly walk-through history of the Longshore Act.
The Longshore Act was created by Congress in 1927 to cover workers in the commercial ship industry who became injured while
working upon navigable waters. Specifically, it covered Longshoremen, that is people who load and unload cargo from commercial
ships, and it covered workers who build or repaired ships.
In 1972, the Longshore Act was amended to extend coverage beyond those folks working upon navigable waters, to also include
those individuals working on dry land, such as people working on
a pier, or a dry dock.
In 1984, the Longshore Act was once again amended so that individuals who built or worked on boats that were under 65 feet long,
would be covered by State workers compensation laws, and not
Longshore insurance.
This amendment was a positive development. It had the practical
effect of exempting virtually all of the recreational marine industry
from Longshore insurance. How? Because back in 1984, recreational boats over 65 feet were almost unheard of. Today, however, 20 years later, there are over 250,000 recreational boats that
are 65 feet in length or longer. And my bill will provide a common
sense update that will create jobs, and bring this law into the 21stcentury. Now, and in the interest of straight talk, let me squarely
address questions I have heard about this legislation.
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First, will workers exempted from Longshore coverage be worse
off? No. The truth is that State workers compensation laws provide
excellent coverage for workers in the recreational marine industry.
For example, under the Longshore Act, if you are injured you
would receive 66 2/3 percent of your salary. Under State workers
compensation laws, you receive that much or better in 48 out of 50
states. In fact, in many states, the benefits are far more generous
under State workers compensation. For example, in Iowa, if you
were injured, under workers compensation, you would receive 80
percent of your salary and a maximum weekly payment of $1,133.
In contrast, under the Longshore Act, you would receive a mere 66
two-thirds percent of your salary and a maximum weekly amount
of only $1,030.
The second question I have heard is whether people who work
on recreational boats should have the same insurance as people
who work on commercial ships? The answer is no, because the
risks are dramatically different.
For example, commercial ships are built using plate steel and
welding, and assembly can be extremely dangerous. In contrast,
most recreational boats are made using fiberglass shells and even
OSHA recognized that the assembly process is just as safe as the
one used to built cars or light trucks. Indeed, the OSHA statistics
Ive seen indicate that you were three times more likely to be injured while building a commercial ship than working on a recreational boat.
Moreover, with regard to recreational boats, the same OSHA statistics showed that its no more hazardous to build a recreational
boat of more than 65 feet, then it is to build one less than 65 feet.
For these reasons, and many others, my bill has many Democrat
co-sponsors, including Martin Frost, Jim Davis, Rob Andrews and
Norm Dix.
In summary, the Recreational Marine Employment Act is the
first update of the Longshore Act in 20 years. Its about jobs. Its
about common sense. And its about time.
Madam Chairman, I yield back the balance of my time.
[The prepared statement of Mr. Keller follows:]
Statement of Hon. Ric Keller, a Representative in Congress from the State
of Florida
Thank you, madam chairman. And I want to especially thank our witnesses for
being here today, two of whom are fellow Floridians. Welcome to all of you.
Let me begin by telling you the story of how I became interested in creating thousands of jobs in the recreational marine industry. A group of folks who work in the
recreational marine industry in Florida came to my Orlando office. One built recreational boats. Another repaired recreational boats. And a third ran a marina.
They all had something in common. All of them operated small, family owned businesses. All of them wanted to hire more employees, and expand their businesses.
And all of them had one problem. That is, all of them were forced to pay unnecessary and exorbitant insurance premiums under the Longshore and Harbor Workers
Compensation Act.
Specifically, I learned that while workers in the recreational marine industry
should be covered under the state workers compensation laws, these employers, because of a legal technicality, were being forced to pay for longshore insurance, which
was three times more expensive than workers compensation insurance in Florida.
They showed me a recent survey which indicated that employers in the recreational marine industry would save an average of $99,000 per year if they were
exempt from the Longshore Act, and that 95% of those employers said they would
use the savings to create additional jobs. They told me that many jobs were being
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5
outsourced to the Bahamas, Canada and China, where their competitors didnt have
to pay the longshore insurance.
I told them that this was unacceptable, and I decided to file the Recreational Marine Employment Act.
To put this hearing in perspective, let me briefly walk through a history of the
Longshore Act. The Longshore Act was created by Congress in 1927 to cover workers in the commercial ship industry who became injured while working upon navigable waters. Specifically, it covered longshoreman, that is people who load and unload cargo from commercial ships, and it covered workers who built or repaired
ships.
In 1972, the Longshore Act was amended to extend coverage beyond those folks
working upon navigable waters, to also include those individuals working on dry
land, such as people working on a pier, or a dry dock.
In 1984, the Longshore Act was once again amended so that individuals who built
or worked on boats that were under 65 feet long, would be covered by state workers
compensation laws, and not longshore insurance.
This amendment was a positive development. It had the practical effect of exempting virtually all of the recreational marine industry from longshore insurance.
How? Because back in 1984, recreational boats over 65 feet were almost unheard
of. Today, however, twenty years later, there are over 250,000 recreational boats
that are 65 feet in length or longer. And my bill will provide a commonsense update
that will create jobs, and bring this law into the 21st century.
Now, in the interest of straight talk, let me squarely address two questions Ive
heard about this legislation.
First, will workers exempted from longshore coverage be worse off? No. The truth
is that state workers compensation laws provide excellent coverage for workers in
the recreational marine industry. For example, under the Longshore Act, if you were
injured you would receive 66 and two-thirds percent of your salary. Under state
workers compensation laws, you would receive that much or better in 48 out of 50
states. In fact, in many states, the benefits are far more generous under state workers compensation. For example, in Iowa, if you were injured, under workers compensation, you would receive 80% of your salary and a maximum weekly payment
of $1,133. In contrast, under the Longshore Act, you would receive a mere 66 and
two-thirds percent of your salary and a maximum weekly amount of only $1,030.
The second question Ive heard is whether people who work on recreational boats
should have the same insurance as people who work on commercial ships? The answer is no, because the risks are dramatically different.
For example, commercial ships are built using plate steel and welding, and the
assembly can be extremely dangerous. In contrast, most recreational boats are made
using fiberglass shells and even OSHA recognized that the assembly process is just
as safe as the one used to build cars or light trucks. Indeed, the OSHA statistics
Ive seen indicate that you were three times more likely to be injured while building
a commercial ship than working on a recreational boat.
Moreover, with regard to recreational boats, these same OSHA stats show that
its no more hazardous to build a recreational boat of more than 65 feet, than it is
to build one less than 65 feet.
For these reasons, my bill has many Democrat co-sponsors, including Martin
Frost, Jim Davis and Rob Andrews.
In summary, the Recreational Marine Employment Act is the first update of the
Longshore Act in 20 years. Its about creating jobs. Its about common sense. And
its about time.
I yield back the balance of my time.
Vice-Chairman BIGGERT. Thank you very much.

Before I proceed, I would like to extend a warm welcome to the
Ranking Member of the Full Committee, Congressman George Miller, who has joined us today. Mr. Miller has had a long interest,
long-standing interest, in this program, and direct involvement
with the last amendments to the program in 1984. So were very
pleased to have you with us today. Thank you.
And with that, I will yield to the distinguished Ranking Minority
Member from New York, Mr. Owens, for whatever opening statement he may wish to make.
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STATEMENT OF HON. MAJOR R. OWENS, RANKING MEMBER,
SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE
Mr. OWENS. Thank you very much.

Madam Chairman, I would like to note that my staff has checked
yachttraders.com on the Web, and found that used boats of 70 feet
and longer are being sold for $900,000 and much more. This is not
the Mom and Pop recreational scenario which has just been presented by my colleague, Mr. Keller.
People are willing to pay more for boats, they want bigger boats,
why do they want cheaper insurance?
Madam Chairman, I understand that the purpose of todays vital
hearing is to examine the potential consequences of H.R. 1329,
which has been introduced by Mr. Keller, to amend the Longshore
and Harbor Workers Compensation Act.
Let me make it very clear, at the outset, this hearing should also
recognize the Longshore Act as a very important public law. By
providing essential medical benefits, rehabilitation services, and
compensation for lost wages, the Act ensures a vital safety net for
maritime workers, when injured or killed on-the-job. The
Longshore, Harbor, and other maritime workers covered by this
Act are carrying out difficult and often very dangerous jobs. These
workers and their families have more than earned the right to
these hard-won protections.
A brief legislative history of the Longshore and Harbor Workers
Compensation Act is also important to note for the record. When
first enacted in 1927, this Act covered those working on or in navigable waters, beyond the jurisdiction of State workers compensation laws. Amendments in 1972 extend coverage to those working
shore side to load, unload, repair, and build vessels. As a result,
marinas and boatyards were required to buy Longshore insurance
for their workers. Subsequently in 1984, a compromise package of
amendments was ably crafted and enacted to exempt much of the
marine recreational industry from the Act.
Let me repeat that for the record. The 1984 amendments exempted most of the marine recreational industry from the Act.
The benefits of those negotiations and the way in which that
compromise was worked out, is not available to us in a brief hearing like this. We will not have a chance to look at and examine the
nature of that compromise today.
It is my understanding that the bill introduced by Representative
Keller seeks to undo the 1984 compromise. I would be strongly opposed to any effort to use this hearing as a mechanism for putting
longshore and workers compensation benefits on the chopping
block.
Madam Chairman, I look forward to hearing from the witnesses.
Vice-Chairman BIGGERT. The gentleman yields back.
We dont usually have other Members make opening statements,
but if the ranking member would care to?
Mr. MILLER. No.
Vice-Chairman BIGGERT. Fine. OK. Thank you.
With that, we will begin our panel of distinguished guests. Our
first witness today is Ms. Kristina Hebert?
Ms. HEBERT. Hebert.
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Vice-Chairman BIGGERT. Hebert. Ms. Hebert is Vice President of
Operations, Wards Marine Electric Company, a family business operating for over 54 years, with 42 employees that provide mobile
dockside service, engineering, engraving and design services, and
the distribution of marine electric equipment.
Ms. Hebert is also Vice President of the Marine Industries Association of South Florida representing over 800 marine-related businesses, and over 180,000 jobs.
Next, is Mr. Larry Nelson. Mr. Nelson has worked for Westport
Shipyard for 22 years. Under his tenure the company has grown
from 38 employees who build boats for the salmon industry to its
current size of over 600 employees, who construct large recreational motor yachts. Westport Shipyard is recognized as the top
builder in the U.S., and one of the top 15 worldwide.
Next on our panel is Mr. Robert McGarrah. Mr. McGarrah has
been Coordinator for Workers Compensation for AFL-CIO since
2002, where he works on all national and state programs to compensate injured workers, ranging from Homeland Security to State
Workers Compensation. He previously worked for AFL-CIOs
President, John Sweeney, on health-care, contingent labor and election reform issues.
Finally, we will hear from Mr. Ian Greenway. Mr. Greenway is
President and owner of LIG Marine Managers in St. Petersburg,
Florida. Prior to his starting his own company, Mr. Greenway was
a broker with Lloyds of London for 25 years. He is the author of
several publications, including Navigating Marine Insurance, and
the second edition of Navigating Marine Workers Compensation
2000.
Before our witnesses begin their testimony, I would like to remind the Members that we will ask questions after the entire
panel has testified. In addition, Committee Rule 2 imposes a 5minute limit on all questions.
And then, we will have lights for you, the witnesses, and allocate
5 minutes. If you dont get to all of your testimony, dont worry
about it, I am sure that we will in the questions.
And so with that, we will begin with Ms. Hebert. You are recognized for 5 minutes.
STATEMENT OF KRISTINA HEBERT, VICE PRESIDENT OF OPERATIONS, WARDS MARINE ELECTRIC, INC. FORT LAUDERDALE, FL
Ms. HEBERT. Good morning. Madam Chairperson, and Ranking

Member Owens, thank you for giving me this opportunity. As mentioned, my name is Kristina Hebert. I am Vice President of Operations of my familys business, Wards Marine Electric, Inc. We
have been in business for 54 years. My grandfather started it and
still comes to work about three times a week.
I stand before you today to ask that the recreational marine industry be removed from the Longshore and Harbor Workers Compensation Act requirements, by extending the current exceptions
for boats under 65 feet to encompass the entire universe of recreational boats.
Much of what I will describe for you today, regarding how work
is performed and the risks that our employees face each today, is
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no different than what is faced by skilled craftsmen performing
work in similar non-marine highly skilled trades. For example,
most boats are hauled out of the water when repair work is being
done at a recreational marine facility. Travel lifts are used to simply pick up the boat and move it inside a shed, or further inland
into a tent or shed. In some cases work is performed on a boat behind an owners house. And finally, work is also performed at a
marina where minor repairs and estimates are given.
Because our workers are not subject to the kinds of hazards
found in commercial environments, such as a bustling commercial
port or shipyard, it is appropriate and necessary that the recreational marine industry remain under the jurisdiction of State
workers compensation and be excluded entirely from the
Longshore and Harbor Workers Compensation Act.
This low risk environment can be further demonstrated by the
amount and severity of injuries faced by our workers. At Wards
Marine Electric we have a claims/loss ratio for workers compensation injuries that have been averaging less than 2 percent for the
last 5 years. We pride ourselves on providing excellent training in
a safe working environment for workers, which is demonstrated by
our low accident rate. We strongly believe we can provide quality
injury insurance for our employees by only purchasing State workers compensation. We understand the necessity of Longshore insurance to protect Longshoremen, harbor workers and stevedores,
along with others in the commercial shipbuilding and shipping repair segment of the industry.
However, it is important to understand that workers in the recreational marine industry are not exposed and do not encounter
the same hazardous environments or the severity of injuries as
those who work in commercial merchant ships and ports and shipyard. State workers compensation is sufficient for industries, and
as mentioned by Congressman Keller, in some instances, is more
financially beneficial to the worker. The logic of removing the recreational marine employee from mandatory Longshore coverage is
demonstrated by the minimal number of claims. For the recreational marine industry, Longshore coverage is duplicative and
unnecessary. Our employees claims can be adequately covered by
state insurance coverage.
It is also important to note that the recreational marine industry
is growing as the sizes of recreational vessels grow. The trend in
growth of the typical vessel size has continued over the past 20
years. In 2003, the most stable segment of the industry, with an
astonishing 11 percent growth rate, was the boats over 150 feet.
For us at Wards, where we choose to follow the law and provide
coverageproof of coverage for our workers, we must provide coverage for every marine facility in the county.
This is not to say that only boats over 65 feet are our community.
It is just because boats over 65 feet have visited our community
and all of our facilities. Once a marina or boatyard accommodates
a boat over 65 feet, then all workers are subject to longshore exposure and must purchase the coverage or risk operating illegally.
Unless the footage exemption was large enough to encompass every
recreational boat built in the United States, these circumstances
would not change.
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Today the playing field is not level. We bill our skilled workforce
at $75 an hour, subtract an employees hourly pay, and of the remainder, $54 is contributed per $100 of payroll, to cover the
Longshore premium. Given we cannot raise our labor rate if we
want to remain competitive in the marketplace, we make very little
profit on our workers who are engaged in servicing boats over 65
feet.
Further, if a company works on these larger boats, it cannot obtain State workers compensation in the marine industry without
Longshore insurance. For many of then, the choices is to purchase
both State workers compensation and Longshore, or purchase neither. I am sorry to say that faced with that choice, some are providing no coverage for their workers. However, if they had the option of providing only State workers compensation, I would believe
businesses would rush to provide coverage for their workers.
Due to the high cost of purchasing Longshore insurance premiums, businesses like ours have experienced negative consequences in competing for business. Boat owners often like to
make one port-of-call and use one facility for all of their repairs.
According to recent study in Broward County, Florida, 1400 boats
not based in the county visit the area. Thirteen hundred of those
will have work done in a boatyard with an average bill of$140,000.
These out-of- town boaters are important to the growth the recreational marine industry, and the servicing of such boats is a critical revenue and employment base for many states in the country.
Unfortunately, particularly in coastal states like Florida, this
business is rapidly going overseas. In the case of Florida, and much
of the Southeast, many boat owners are choosing to have work
done in the Bahamas or the Caribbean. Service costs in the Caribbean and the Bahamas are lower. One of the main reasons is that
employers there do not have to pay the extremely high cost of
Longshore coverage and therefore can outbid American businesses.
As an international parts distributor, Wards Marine Electric is
able to gauge the workloads of all of the ports of call because of
the parts orders we receive.
While we are able to profit from the sale of equipment, the boat
in industry and community suffer as a whole. Like most firms in
the marine service industry, our company is a small business. If we
want to remain competitive in the recreational marine industry,
which includes a large percentage of boats over 65 feet the law requires us to purchase the insurance. It is a challenge of Wards Marine Electric to compete due to the inability to provide competitive
labor rates for those who do not purchase the coverage.
Let me conclude by saying that if the recreational marine industry was removed from Longshore and Harbor Workers Compensation Act requirements, employers like myself, Wards Marine Electric would save $200,000 a year. This money could instead be used
to expand our services, increase our employees wages, and hire
more skilled workers. It would be a win-win for employers and employees alike. In order for the industry to prosper and grow, we ask
for your support in expanding the exception of boats under 65 feet
to encompass the entire universe of recreational boats. The recreational marine industry needs relief from this burdensome, costly
and duplicative coverage.
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Thank you, Members of the Committee, for bringing to this public forum an issue that is critical to our industry.
[The prepared statement of Ms. Hebert follows:]
Statement of Kristina Hebert, Vice President of Operations, Wards Marine
Electric, Inc., Ft. Lauderdale, FL
Introduction
Good morning, Chairman Norwood, ranking member Owens and Committee Members. Thank you for providing me with the opportunity to represent small recreational marine businesses and to testify before your Committee. My name is
Kristina Hebert and I am Vice President of Operations and 3rd generation of my
familys businessWards Marine Electric, Inc. We have been in business for over
54 years and we have 42 employees, sixteen of whom are American Boat & Yacht
Council-certified marine electricians. Our company provides mobile dockside service,
engineering, engraving and design services as well as distributes a complete line of
marine electric equipment. Most of our service work is performed in marinas and
boatyards where we act as subcontractors.
Aside from my work with Wards Marine Electric, Inc., I am Vice President of the
Marine Industries Association of South Florida (MIASF). Throughout the state of
Florida, MIASF represents over 800 marine related businesses, such as builders,
marinas and boat yards, repairers, services, dealers, and yacht brokers. Our industry represents over 180,000 jobs and generates over 14 billion dollars in economic
impact to the economy of Florida. Accordingly, my remarks reflect the views of the
Marine Industries Association of South Florida as well.
I sit before you today to ask that the recreational marine industry be removed
from under Longshore and Harbors Workers Compensation Act requirements, by
extending the current exception for boats under 65 feet to encompass the entire universe of recreational boats.
Low Risk Environment
Much of what I will describe for you today, regarding how work is performed and
the risks that our employees face each day, is no different than what is faced by
skilled craftsmen performing work in similar non-marine highly skilled trades. For
example, most boats are hauled out of the water when repair work is being done
at a recreational marine facility. Travel lifts are used to simply pick up the boat
and move it further inland under a tent or shed. In some cases work is performed
on a boat behind an owners house. Finally, work is also performed at a marina
where minor repairs and estimates are given. Because our workers are not subject
to the kinds of hazards found in commercial environments, such as a bustling commercial port or shipyard, it is appropriate and necessary that the recreational marine industry remain under the jurisdiction of state workers compensation and be
excluded entirely from the Longshore and Harbor Workers Compensation Act.
Low Injury Rates
This low risk environment can be further demonstrated by the amount and severity of injuries faced by our workers. At Wards Marine Electric we have a claims/
loss ratio for workers compensation injuries that has been averaging less than two
percent for the last five years. We pride ourselves on providing excellent training
and a safe working environment for our workers, which is demonstrated by our low
accident rate. We strongly believe we can provide quality injury insurance for our
employees by only purchasing state workers compensation. We understand the necessity of Longshore insurance to protect longshoremen, harbor workers and stevedores, along with others in the commercial shipbuilding and ship repair segment of
the industry. It is important to understand that workers in the recreational marine
industry do not encounter and are not exposed to the same hazardous environments
or the severity of injuries as the workers who work on commercial merchant ships
in ports and shipyards. State workers compensation is sufficient for our industry,
and in many instances, is more financially beneficial to the worker. The logic of removing the recreational marine employee from mandatory Longshore coverage is
demonstrated by the minimal number of claims. In fact, at Wards we have never
had a Longshore claim, yet we continue to pay the exorbitant cost just because we
work on recreational boats which happen to be over 65 feet long. For the recreational marine industry, Longshore coverage is duplicative and unnecessary. Our
employees claims can be adequately covered by state insurance coverage.
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Mixed Use Facilities
It is also important to note that the recreational marine industry is growing as
the sizes of recreational vessels grow. The trend in growth of the typical vessel size
has continued over the past 20 years. In 2003, the most stable segment of the industry, with an astounding 11% growth increase, was the over 150 foot market. For us
at Wards, where we choose to follow the law, we must provide proof of coverage
for EVERY marine facility in the county. This is not to say that ONLY boats over
65 feet visit our community. It is just because boats over 65 feet HAVE visited our
community and all of our facilities. Once a marina or boatyard accommodates a boat
over 65 feet, then all workers are subject to Longshore exposure and must purchase
the coverage or risk operating illegally. Unless the footage exemption was large
enough to encompass every recreational boat built in the United States, the circumstances would not change.
High Cost of Longshore Coverage
Today the playing field is not level. We bill our skilled workforce at $75 per hour,
of that $54 is contributed to cover the Longshore premium. Given that we cannot
raise our labor rate if we want to remain competitive in the marketplace, we make
very little profit on our workers who are engaged in servicing boats over 65 feet.
Further, if a company works on these larger boats, it cannot obtain state workers
compensation in the marine industry without Longshore insurance. For many then,
the choice is to purchase both state workers compensation and Longshore, or purchase neither. I am sorry to say that faced with that choice, some provide no coverage for their workers. However, if they had the option of providing only state
workers compensation, I believe businesses would rush to provide coverage to their
workers.
Competitive Disadvantage International
Due to the high costs of purchasing Longshore insurance premiums, businesses
like ours have experienced negative consequences in competing for business. Boat
owners often like to make one port-of-call and use one facility for all of their repairs. According to a recent study in Broward County, Florida, an average of 1400
boats not based in the county visit the area annually. Of those, 1300 will have work
done in an area boatyard with an average bill of $140,000. These out of town boaters are important to the growth of the recreational marine industry, and the servicing of such boats is a critical revenue and employment base for many states in
the country. Unfortunately, particularly for coastal states like Florida, this business
is rapidly going overseas. In the case of Florida, many boat owners are choosing to
have work done in the Bahamas and Caribbean. Service costs in Caribbean and the
Bahamas are lower. One of the main reasons is that employers there do not have
to pay the extremely high cost of Longshore coverage and can therefore outbid
American businesses. As an international parts distributor, Wards Marine Electric
is able to gauge the workloads of other ports of call because of the parts orders we
receive. While we are able to profit from the sale of equipment, the boating industry
and community suffer as a whole.
Competitive Disadvantage Domestic
Like most firms in the marine service industry, our company is a small business.
If we want to remain competitive in the recreational marine industry, which includes a large percentage of boats over 65 feet, the law requires us to purchase
Longshore insurance. Currently, there are employers who choose not to obtain
Longshore insurance because they simply cannot afford the premiums. However,
many businesses, including ours, do purchase the coverage. Therefore we are placed
at a significant disadvantage to our domestic competitors who do not comply with
the law. This, coupled with the competition of foreign-based repair centers, puts
small businesses like mine in a very difficult position. It is a challenge of Wards
Marine Electric to compete due to the inability to provide competitive labor rates
with those who do not purchase Longshore coverage.
Conclusion
Let me conclude by saying that if the recreational marine industry was removed
from Longshore and Harbors Workers Compensation Act requirements, employers
like Wards Marine Electric would save approximately $200,000 a year by not having to purchase the unnecessary and duplicative Longshore insurance. This money
could instead be used to expand our services, increase our employees wages, and
hire more skilled workers. It would be a win-win for employers and employees alike.
In order for the industry to prosper and grow, we ask for your support in expanding
the exception of boats under 65 feet to encompass the entire universe of recreational
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boats. The recreational marine industry needs relief from this burdensome, costly
and duplicative coverage.
Thank you, Mr. Chairman and other Members of the Committee, for bringing to
this public forum an issue that is critical to our industry.
Vice-Chairman BIGGERT. Thank you very much.

Mr. Nelson, please proceed for 5 minutes.
STATEMENT OF LARRY NELSON, VICE PRESIDENT,
ADMINISTRATION, WESTPORT SHIPYARD, INC., WESTPORT, WA
Mr. NELSON. Thank you, Madam Chairman and Ranking Member Owens, its a pleasure to be here before the Committee today
to discuss Congressman Kellers legislation, H.R. 1329. I have submitted written testimony for the record, but I would like to take
a few minutes now to summarize that testimony.
My name is Larry Nelson, I am Chairman and Vice President
and a principal in Westport Shipyard in Westport, Washington. I
have worked for Westport most of my 25 year career in
boatbuilding, and have work in every trade in the business. I started in production in 1983, when we were a small company of 38 employees. We entered the recreational marine boat industry just as
the West Coast fishing industry was collapsing. Back then a 50-foot
fiberglass boat was considered a larger boat. A boat over 65 feet
was almost unheard of at that time.
We didnt have the technology we have now to build fiberglass
that big. The few boats that they were, there were over 65 feet
were actually built like ships, because that was the best technology
there was back then. Today, the smallest boat we build is 98 feet.
Westport is located in an economically depressed area in Grays
Harbor County, we have over 600 employees at three different locations in Washington state. We employ 700 more working indirectly
through small business as subcontractors. We are also very proud
of the fact that we are nowwe have second-generation employees
with our company, and whole families that work for Westport. And
that is not uncommon in this industry as a whole.
There really were four points in my testimony. The first point,
H.R. 1329, will continue to meet the intent of the 1984 amendment
to the Longshore Act. No. 2, workers will be adequately protected,
benefits will not suffer.
No. 3, boatbuilding, specifically large boatbuilding, is much safer
than shipbuilding. And No. 4, jobs will be created, and those existing jobs will be protected.
The purpose of H.R. 1329 is to protect workers who are creating
and sustaining jobs. The same rationale applies today as did in
1984, when 65 was ruled a large boat. That was where the demarcation was. Really nothing has changed, back then, except for the
size of the boats and the materials that we use. We now apply
small boatbuilding to large boats.
Costs versus the benefits. There has been some question whether
H.R. 1329 will result in a reduction of benefits. An employee would
have to earn $80,000 a year to obtain the maximum Longshore
benefit of $1,031. In Washington, any employee earning less than
$30 an hour will receive about the same under the Longshore Act.
That covers virtually every employee in our industry. There is no
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difference in coverage. And in some cases, Washington State Workers Compensation is better, actually exceeds Longshore.
Longshore coverage is two to four times more expensive than
State workers compensation, bringing manufacturers, especially
small businesses, where in many instances use those savings to expand their businesses, expand their work forces, update and enhance their production processes.
There is a great difference between shipbuilding and
boatbuilding. Recreational boatbuilding is more closely related to
the housing industry and actually to recreational vehicle construction. With its indoor construction, under control conditions, we employee indoor trades like cabinet makers, electricians, and so on,
the same as you see in the housing industry.
Work on large boats has been proven to be twice as safe as work
on smaller boats under 65 feet, and three times as safe as shipbuilding in general. This is a safe industry. I build boats between
48 feet and 164 feet, and there really is no difference. In fact, the
larger the boat, the safer it is to work on, because the spaces are
larger.
Finally, competition in jobs. Worldwide, the U.S. market share is
shrinking. In 1999, the U.S. was in first place and held 29 percent
of the worlds market share. Just 3 years later, in 2003, we had
fallen to 15 percent of market share, basically cut in half in a market that is growing.
Thousands of jobs have already been lost, they have gone offshore due to recreational boatbuilders going out of business. Im
sure a $10 million boat, maybe a $10 million boat here is a $7 million boat in China. So whats the difference? If you look an American boat and look in a boat from China, the materials are the
same, the cost are the same, its in labor costs.
We have to be able to compete in a worldwide market. To do that
we had to find other ways to compete. We need to build and reinvest back into our businesses, back into technology, back into workforce training, so that we can remain competitive.
In conclusion, Longshore coverage is important to workers who
work in the Longshore and stevedore industry, but it has no place
in the recreational boatbuilding industry. Workers in the recreational boatbuilding industry do not face the dangers that Longshoremen and stevedores face, and the costs of Longshore insurance outweighs the benefits.
The purpose of the 1984 exemption will continue to be served
under H.R. 1329. There will be no decrease in safety, competition
will be enhanced, jobs protected, without a loss of benefits to employees. H.R. 1329 is good for industry, is good for our employees,
and is good for this country.
Thank you, Madam Chairman, and Members of the Committee.
[The prepared statement of Mr. Nelson follows:]
Statement of Larry Nelson, Vice President, Administration, Westport
Shipyard, Inc., Westport, WA
Mr. Chairman and Ranking Member Owens, it is a pleasure to appear before the
Subcommittee on Workforce Protections to discuss Congressman Ric Kellers legislation, H.R. 1329, which, in my opinion, would fulfill the intentions of Congress when
in 1984 it provided an exemption for coverage from Longshore and Harbor Workers
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Compensation Act Insurance (Longshore) for recreational vessels under 65 feet in
length.
My name is Larry Nelson, I am Chairman and Vice President and a principle in
Westport Shipyard in Westport Washington. Throughout my 25 year career in boat
building, as with most of our executive management, I have been involved in every
aspect of our business including working in each of the various trades that we employee. I started at the shipyard, in production, in 1983 when we were a small company of 38 employees building boats for the salmon industry. We entered the recreational industry in the early 1980s just as the west coast fishing industry was
collapsing. Back then a 50 vessel was considered a large yacht and one over 65
was almost unheard of in the Northwest. Over the years the yachts have grown
until now the smallest we build is 98.
As the yachts have grown and our employment level has increased, our working
conditions and our safety record have steadily improved. Like many in our industry
we are located in an economically depressed area where the local economy was once
fishing and timber based. We have been instrumental in maintaining the integrity
of many local economies. We currently employee over 600 employees at three different locations in Washington state, and 388 of our employees live in Westport. We
just invested well over 10 million dollars in a brand new facility in Port Angeles
Washington, another economically depressed area where we employee over 100 new
employees and hope to grow to 200 by this time next year. We are in active partnerships with the community colleges at all of our locations to develop training programs for our growing industry.
This is an incredibly competitive business. Fortunately each of the US builders
has carved out a different product niche so we are not competing with each other.
Our real competition is off shore and they are becoming stronger every year. As a
result, I need financial resources to reinvest in technology and production efficiencies and new products.
Today, there are more than 250,000 recreational vessels longer than 65 feet.
These are built by the more than two dozen boat builders in the United States,
many of which are small businesses. If any recreational boat builder plans to build
a recreational vessel longer than 65 feet, that builder would have to purchase
Longshore coverage for his/her workers. This requirement creates severe hardship
for many recreational vessel manufacturers, many of which only produce between
one and six boats each year. Longshore coverage is two, three or even four times
more expensive than state workers compensation coverage, which we believe is the
more appropriate protection for workers in the recreational marine industry.
As you know, H.R. 1329 would remove the recreational marine industry from coverage under the Longshore and Harbor Workers Compensation Act and place the
industry and its workers under state workers compensation.
The Longshore and Harbor Workers Compensation Act was originally enacted in
1927. Its purpose was to provide coverage to non-seamen and maritime workers (i.e.,
longshoremen, ship builders, ship repairers and stevedores) who work on or near
navigable waters facilitates water-borne commerce. Workers in these industries,
then as now, faced significant dangers and Congress, exercising its jurisdiction over
our nations navigable waters, believed that a special form of national protection
was needed.
In the ensuing years, Longshore coverage was by practice mistakenly extended to
the recreational industry. In 1984, Congress recognized this error by providing an
exemption to Longshore protection for recreational vessels over 65 feet. Today, Congress should finish, or, if you will, update, the work that it began in 1984 by enacting H.R. 1329.
Few recreational vessels were constructed in 1984 that were longer than 65 feet
in length, and thus, the 1984 amendments had the practical effect of fully implementing the intent of Congress by exempting essentially the entire recreational industry from Longshore. But, again, with the increase in the size of recreational vessels, H.R. 1329 is necessary now to fulfill fully the intent of the 1984 amendments.
There is a great difference between ship builders whose workers have traditionally been covered by Longshore, and my segment of the marine industryrecreational boat building. The Occupational Safety & Health Administration (OSHA)
defines ship building as the construction of large commercial or naval vessels that
are fabricated in place, most often of steel, typically with the vessel afloat or in drydock 1 On the other hand, recreational boat building, according to OSHA, is different:
Based on a review of OSHAs compliance experience in boat building facilities and a comparison of these two sets of standards, it is OSHAs opinion
1 OSHA
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that the general industry standards of part 1910 [that is, OSHAs standards
for general manufacturing industries in workers are provided with state
workers compensation protection] more closely address the types of operations and hazards of recreational boat building than do the shipyard
standards of part 1915 [which establishes OSHAs standards for employment of navigable waters and ship building, ship repairing, ship breaking,
and related activities].2
It is evident to those of us in the recreational marine industry that recreational
boat building does not present its workers with the dangers faced in ship building
and in other industries that should be protected by Longshore. I understand that
there are those who are concerned about whether there will be an adverse impact
on workers if H.R. 1329 were enacted. That could very well have been a question
asked in 1984 when the Subcommittee endorsed the current 65 feet exception to the
requirement for Longshore protection. I am unaware, however, of any harmful impact to those workers who manufacture recreational vessels less than 65 feet and
who are not covered as the result of the 1984 amendments by state workers compensation. I will contend that the reason we have not seen an effort to roll back
the 65 feet exception is because there has not been any negative impact on workers.
We, in the industry, have conducted a survey among some of the major recreational
boat manufacturers to determine whether in fact there were a greater number and
more significant injuries experienced by workers who manufactured vessels in excess of 65 feet. Allow me to provide two significant examples.
Hatteras Yachts, is one of the major boat builders in the world. Hatteras manufactures vessels both under and over 65 feet. Hatteras reported that in 2001, workers manufacturing vessels under 65 feet suffered 10.4 injuries per 100 workers;
workers working on vessels larger than 65 feet experienced 5.8 injuries per 100
workers. Total injuries were 7.7 and total serious injuries were 3.1.
Another major boat manufacturer that manufactures under and over 65 feet, Sea
Ray, reported the following: for vessels that they manufactured under 65 feet in
length there were 9.4 injuries per 100 workers; for workers on vessels larger than
65 feet, 5.2 injuries per 100 workers were experienced. The total number of injuries
was 8.9 per 100 workers, with the total serious injuries only 1.6 per 100 workers.
By comparison, the average OSHA Recordable Incident Rates for ship building (as
opposed to boat building) in the year 2000 was a total of 22 injuries per 100 workers, with 11.7 of those classified as serious.
So, as you can see, recreational boat building both under and over 65 feet is significantly safer than the more dangerous ship building industry. particularly in
terms of those workers working in the recreational marine industry on boats over
65 feet. Therefore, it is clear to us that recreational marine workers building recreational vessels of all sizes should be covered by state workers compensation rather than Longshore.
Additionally, the many small businesses that build recreational vessels would
greatly benefit if H.R. 1329 were enacted and they no longer had to provide the
vastly more expensive Longshore coverage for its workers. By switching to state
workers compensation coverage, which is two to four times less expensive as
Longshore coverage, these small businesses would in many instances use the savings to expand their businesses, expand their workforces and update and enhance
their production processes.
In conclusion, Longshore coverage is important to workers who toil in the
longshore and stevedore industry, but it has no place in the recreational vessel
building industry. Workers in the recreational boat building industry do not face the
dangers that longshoremen and stevedores face. Rather, they face no greater risks
than those faced by other land-based workers in the manufacturing industry. Further, the resources spent on Longshore coverage could be better utilized by the
small businesses to strengthen their businesses and their livelihood. Thus, recreational marine workers should be covered by state workers compensation. We ask
you to expeditiously pass H.R. 1329
Thank you, Mr. Chairman and other members of the Committee for your time and
attention. I would be happy to answer any questions.
Vice-Chairman BIGGERT. Thank you, very much.

Mr. McGarrah.
2 Id.
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STATEMENT OF ROBERT E. MCGARRAH, JR., COORDINATOR
FOR WORKERS COMPENSATION, AFL-CIO, WASHINGTON, DC
Mr. MCGARRAH. Thank you very much, Madam Chairman and

Members of the Committee. I appreciate the invitation to be here
today. I want to make three basic points.
Vice-Chairman BIGGERT. Would you check you microphone, I
dont think that its turned on. Or, pull it closer.
Mr. MCGARRAH. All right. I wanted to make three basic points,
Madam Chair.
First, this legislation would deprive thousands of working families of the protections that Congress guaranteed them when it
amended the Longshore and Harbor Act in 1972 and 1984. It would
do this by excluding them from coverage, and forcing them to apply
for poverty level benefits under State Workers Compensation laws.
Before 1972, the benefits of the Longshore Act were $70 a week,
and State benefits were actually higher. Some injured workers
could file lawsuits against their employers, and that was a needed
and necessary reform that Congress took in the Act in 1972. Including them under the Longshore Act, it created a tort reform by
putting people in workers compensation under Federal law, and it
created a new benefits schedule.
The point that we have today, Madam Chair, is that we have exactly the opposite situation, and marine industry is simply seeking
to push workers out of the Longshore Act and to poverty level benefits under State workers compensation laws.
A major study that will be coming out shortly from the National
Academy of Social Insurance makes it very clear that the benefits
under State laws are now 30 to 50 percent below the benefits payable under the Longshore Act. For example, in California, under
the Longshore Act, the maximum payment for total disability is
$1031 compared to $728 in California, $662 in Ohio, $626 in Florida, and merely $400 a week in New York.
The State workers compensation laws, as I said, are at or near
poverty in their payments. Only the District of Columbia which follows the benefits under Longshoremen Act, are benefits anywhere
near above poverty. And I have a table that is attached to my
statement today.
Leading authorities on workers compensation, like Professor
John Burton and Dean Emily Spieler of Northeastern University
Law School, have carefully documented how State workers compensation benefits have been slashed over the last 15 years. They
were done so because large increases in insurance forced businesses to look for solutions, and they teamed up with insurers to
demand cuts in benefits. This is not the solution.
Longshore rates are subjected to the same market forces as State
workers compensation rates. When the hard market began in
2001, insurers began pricing their product and increasing rates.
And that is the reason why youre hearing the complaints today.
In fact, in todays Wall Street Journal, on the front page of the
Money and Investment section, makes it very clear from the risk
management survey thats presented, the rates are now starting to
decline, because weve had enormous rate increases since 2001.
And workmens compensation insurance rates and longshore rates
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will be going down as well. In fact, in Florida it was recently reported that Longshore rates will be cut by 50 percent.
But we will suggest, Madam Chairman, is that we look instead
to the recreational marine industry. Yes, it is true that they are
large numbers of yachts, and I believe the figure was quoted as
250,000 are now well over 65 feet and more. And it is also true,
that China is injuring this luxury yacht business, selling yachts at
$7 million a year, instead of the $10 million thats charged, and
much more, by my colleagues here on this panel.
I would suggest, Madam Chairman, that this is an industry that
has very good profit margins, and has customers that can certainly
afford to pay workers when theyre injured rates that are keeping
them out of poverty. This is a wage insurance program, not a poverty program. Workers compensation needs to be providing people
with living wages so that they can get healthy and get back to
work.
Amending the Longshore Act by throwing workers and to poverty
would be a major mistake, and a travesty. Thank you.
[The prepared statement of Mr. McGarrah follows:]
Statement of Robert E. McGarrah, Jr., Coordinator for Workers
Compensation, AFLCIO, Washington, DC
Chairman Norwood, Ranking Member Owens and Members of the Subcommittee,
I am Robert E. McGarrah, Jr., Coordinator for Workers Compensation for the AFL
CIO and I thank you for the invitation to appear before the Committee to present
the views of working families on H.R. 1329, the Recreational Marine Employment
Act of 2003.
This legislation would deprive thousands of working families of the protections
Congress guaranteed them when it amended the Longshore and Harbor Workers
Compensation Act in 1972 and 1984. It would do so by excluding them from coverage under the Act and forcing them to apply for poverty-level benefits under state
workers compensation laws.
Before Congress amended the Longshore Act in 1972, the benefits paid to an injured worker were $70.00 per week. But some injured workers could also sue their
employers in tort under the doctrine laid down by the Supreme Court in Ryan Stevedoring Co. v. PanAtlantic Steamship Corp., 350 U.S. 124, 100 L. Ed. 133, 76 S.
Ct. 232 (1956).
State workers compensation benefits for the same injuries, however, were much
more generous than the $70 weekly Longshore benefits. Maximum weekly benefits
for permanent total disability, for example, were higher in Alaska, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Michigan, New York, New Jersey, Rhode Island, and Washington-all states with important recreational marine industries.1
Employers complained to Congress that they faced both the threat of litigation
and efforts by injured workers to win higher compensation benefits under state
workers compensation laws-exactly the opposite of todays complaints from the
recreational marine industry.
Carefully balancing the interests of business and labor, Congress amended the
Longshore Act in 1972 to provide an exclusive remedy, protecting employers from
costly and unpredictable litigation. It also raised the $70 per week compensation to
equal two-thirds of a workers pre-injury wages. Workers in the recreational marine
industry were covered under the Act if they worked on boats and yachts over sixtyfive feet, or in marina construction.
Now, the recreational marine industry asks Congress to exempt all of its workers
from coverage under the Longshore Act, dumping them into state workers compensation systems. This proposal, if enacted, would significantly reduce compensation benefits for injured workers. Indeed, in many states, this proposal would reduce
benefits to below poverty levels.
1 The inevitable result of this disparity was that, in the conflict-of-laws picture, the traffic
was made up mostly of claimants trying to get out of the federal act and into a state act. Fn.
72, 9145 Larsons Workers Compensation Law 145.02.
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A review of benefits paid to injured workers for total disability shows that in most
states, workers compensation benefits are 30- 50% lower than the benefits payable
under the Longshore Act. [Figure 55]. Under the Longshore Act, the maximum
weekly payment for total disability is $1031, compared to a maximum benefit of
$728 in California, $662 in Ohio, $626 in Florida, and $400 in New York.
Today, sadly, state workers compensation benefits hover at or near poverty in
most states. According to a soon-to-be published study by Dr. Allan Hunt for the
National Academy of Social Insurance, 2 [Figure 54] the average Temporary Total
Disability benefits paid to injured workers are below poverty in fifteen states. They
are only slightly above poverty in another twenty-two states. In fact, only in the
District of Columbia, which follows the benefit standards of the Longshore Act, are
benefits for this insurance program above 160% of the poverty threshold for a family
of four.
Leading authorities on workers compensation, including Professor John F. Burton, Jr., the former Chairman of the National Commission on State Workers Compensation Laws, and Northeastern University Law School Dean Emily Spieler, have
carefully documented the correlation between rising workers compensation insurance rates and the decline of benefits paid to injured workers. 3 Indeed, each time
state workers compensation insurance rates rise-as they almost always do when
the stock and bond markets decline- insurers tell their customers that the only
solution is to cut benefits.
Longshore rates are affected by the same market forces and underwriting cycle
as state workers compensation rates. When the recession began in 2001, insurers
began pricing their product in what they call a hard market. As a result, the price
of workers compensation insurance rose during a recession, when businesses were
least able to afford a price increase. Now, as the economy is showing signs of a recovery, prices are beginning to fall in some markets. Longshore rates in Florida recently fell by 50%.
Insurance rates for workers compensation are also affected by the rates of injury
in an industry or occupation. The Bureau of Labor Statistics reports that the boat
building and repairing industry is one of the more hazardous industries in America,
with an injury rate of 11.1 per 100 full-time workers, compared to a national average of 5.3.4 Normally these rates are priced into the premium set by insurers for
workers compensation.
Finally, Mr. Chairman, leading members of the recreational marine industry have
argued that todays recreational yachts and boats are larger than they were in 1984,
when the Longshore Act was last amended. In 1984, workers on boats and yachts
under 65-feet were excluded from protection. Today, it is not uncommon to find
yachts exceeding 90 feet. This Tuesday, the New York Times carried a front-page
story about Chinas newest enterprise: luxury yachts.5 Commenting on Chinas ability to produce any product at significant savings in labor costs, Dean Leigh Smith,
executive manager of Australias Gold Coast City Marina, said, What would normally be a $10 million boat is $7 million.
The issue before the Committee today should not be whether Congress should
enact an amendment that would consign more injured workers to poverty-level benefits, but why the marine recreation industry, producing and servicing $10 million
yachts, isnt willing to provide fair compensation to workers injured in this dangerous industry. Why isnt it doing more to reduce high injury rates? If insurance
prices are too high, the first place to turn is the insurance industry itself, not injured workers.
Congress deserves credit for preserving and protecting the Longshore Harbor
Workers Compensation Act. It is a model for the Nation. It provides living wage
compensation to injured workers at time when poverty is all too common.
Thank you.
[Attachments to Mr. McGarrahs statement follow:]

2 Hunt A. Adequacy of Earnings Replacement in Workers Compensation Programs, unpublished study of the National Academy of Social Insurance (Washington, DC: 2004).
3 Emily A. Spieler and John F. Burton, Jr, Compensation for Disabled Workers: Workers
Compensation, in New Approaches to Disability in the Workplace, Industrial Relation Research
Association, (Madison, WI, 1998), pp. 205244.
4 BLS, Number and rate of nonfatal occupational injuries and illnesses by selected industry,
All United States, private industry, 2002.
5 New York Times, July 13, 2004, p. A1.
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20
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Vice-Chairman BIGGERT. Thank you, very much.

Mr. Greenway, youre recognized for 5 minutes.
21
STATEMENT OF IAN R. GREENWAY, LIG MARINE MANAGERS,
INC., ST. PETERSBURG, FL
Mr. GREENWAY. Thank you.

Thank you for the opportunity to be here today. I think everyone
would agree that this is a vital part of insurance. It will fully provide benefits to every stevedore, every shipyard, and has been
doing so for 80 years. But 80 years ago, it started off in a very different fashion working with stevedores and the harbor workers
that were around at the time, and not in the recreational marine
industry.
It has been suggested that the move of recreational boat builders,
repairers and contractors to State workers compensation will put
them on some form of poverty level. And this simply isnt true. The
numbers quoted have talked heavily about the maximum level benefits.
Well, unfortunately, very few people in the recreational marine
field will ever hit those maximums. Theyre not the people buying
these boats. They cannot afford to buy the boats, whether they be
the employer or the employee.
Theyre working at levels where they will get two thirds of their
weekly wage, not hit the maximums, not hit any sort of caps that
are in the State benefits. Now the critical issues with Longshore
insurance, which Im involved in every day, is where a claim dollar
goes. And in reality in the recreational marine industry that claim
dollar goes much more to the medical community and to the legal
community than it does to the injured employee.
Sorry, its distracting to hear the buzzer all the time. I have also
compared changes in Longshore rates in Florida. The change in
Longshore rates in Florida that occurred on July 1 was a reduction
of 42 percent or 44 percent in the effective rate only for a very narrow band of people. It had no effect on boat builders and most boat
repairers. It only hit a very narrow band. It still leaves Florida
among some 15 states with Longshore costs that are more than
double the cost of the State act workers compensation. And thats
where this money is going. Its going to the attorneys, and it is
going to the medical profession. Its not going to claimants, theyre
not going to suffer from this.
We also have an inequity here. Why should the person who is
building the recreational boat of 60 feet be in a different shape to
a person who is building a 70 foot boat?
In 1984, the put the exemption for 65 foot, when there were only
a few 65 foot vessels in existence. The growth of that means the
growth of this footage needs to be addressed now.
But I think theres one other point that we have to address here,
and that is the huge number of employees who are out there today
without any coverage. It is estimated that some one-third of marine
businesses today, recreational marine businesses, today have no
benefits at all, because they are not prepared to pay the exorbitant
price for Longshore.
I think it is in everybodys interest to make sure that every employee has benefits available. The states have a workers compensation system that works under 65 foot, why shouldnt it work over
65 foot? They enforce it. They broadened the coverage, so that everybody has that coverage. The Longshore Act does not provide
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those teeth to ensure that everybody has coverage until after the
claim.
There are thousands of employers throughout this country who
provide no benefits to their employees today. They cant afford
them. That means there are tens, possibly hundreds of thousands
of uninsured employees out there today. I urge this Committee to
move the recreational marine industry back into the State act
workers compensation, so that those people can get coverage so
that every employee can be covered.
Thank you, Madam Chairman.
[The prepared statement of Mr. Greenway follows:]
Statement of Ian R. Greenway, LIG Marine Managers, Inc., St. Petersburg,
FL
Good morning, Chairman Norwood and Ranking Member Owens. My name is Ian
Greenway and I am pleased to be here this morning to address the need for a broader legislative exception for the recreational boating industry from the Longshore and
Harbors Workers Compensation Act (Longshore Act).
There is a great need to continue the efforts of this committee when it last
amended the Longshore Act in 1984. Enactment of a broader legislative exception
for the recreational boating industry will greatly reduce an ill-placed economic burden on the many small businesses of the recreational marine industry, with virtually no significant impact on the highly skilled workforce in this sector of the maritime industry. In fact, enactment of a broader exception will result in a considerable expansion of available benefits and protection to recreational marine workers
across the nation.
I am president and owner of LIG Marine Managers (LIG) located in St. Petersburg, Florida. LIG is a leading provider of commercial marine insurance to independent insurance agencies throughout the United States since 1989. I have the
privilege of interacting regularly with the marine industry and am a member of various trade associations. I have not only underwritten Longshore policies for many
years, but have delivered hundreds of seminars in every corner of this country, to
both the insurance community and the marine industries, as well as authoring a
book dedicated to this topic. As such, I understand the industry and its employers
and workers, as well as the risks these workers face in all aspects of the marine
industry. Of particular relevance to todays hearing, I deal extensively with the recreational marine industry. With your permission I would like to address the impact
that the enactment of a broader legislative exception would have, not only on the
recreational marine industry, but also for the vital protection of its employees.
As you know, the Longshore Act was initially passed in 1927 to provide coverage
to dockside workers, such as stevedores, shipyards and harbor workers. Over the
years, however, the universe of maritime workers who were required to be covered
by Longshore insurance grew to include virtually all waterfront employees. In 1984
Congress provided new exceptions for the coverage of Longshore insurance. Of those
exceptions, exclusion F exempted individuals employed to build, repair or dismantle
any recreational vessel under 65 feet in length. There is no difference in the risks
associated with repairing the plumbing, air conditioning or radio on a 75-foot recreational boat as compared to a 65-foot recreational boat. In 1984, when this exemption was enacted, recreational vessels over 65 feet were a rarity. However, today a
quarter of a million of the boats registered in the United States are over 65 feet
in length.
In fact, current insurance data demonstrates that claims for these larger vessels
are significantly lower. Claims for workers on vessels of 65150 feet are at least
38% lower than those on vessels under 65 feet. The reality is that the larger the
boat, the more money is involved and as such, more care is given to its manufacture,
maintenance and repair. Consider these vessels to be like hand crafted luxury cars,
which literally have white-glove treatment. We see not only fewer injuries but also
fewer serious injuries in larger recreational boats than we do in their smaller counterparts.
There are significant consequences for the marine industryfor both the employer
and employeeby requiring Longshore insurance for recreational marine industries.
The most significant is the vastly increased cost for employers of plumbers, electricians and other specialty contractors when they are compelled to purchase
Longshore insurance rather than the alternative, state workers compensation pro-
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tection. I have submitted for the record a chart that highlights the difference in cost
between Longshore insurance and state workers compensation insurance for these
types of businesses in a number of states with significant recreational marine workers. For example, in states such as Florida, Alabama, Louisiana and Tennessee, as
well as 11 other states, the cost of Longshore insurance is more than double the
cost of acquiring state workers compensation for workers. In another 19 states the
cost is between 50% and 100% higher.
Not only does this result in a huge economic burden for the employer, but it
means that an estimated one-third or more of such employers simply do not purchase any coverage, despite the legal requirement to so do, leaving injured employees without any available medical coverage, or lost wages and disability income.
Transferring these businesses to the state workers compensation system will not
only make these policies more affordable, and provide a wider insurance marketplace to the employer, but also the states will have jurisdiction to enforce their own
rules and ensure all businesses are carrying the coverage required by law to protect
their employees.
There seems to be some concern over how Longshore premiums are allocated.
Each sector of the marine industry has its own classifications, for example ship repair is 6872F, and Stevedoring has four classifications dependent on equipment
used: 7317F, 7309F, 7327F and 7350F. The premiums, payrolls and claims for each
of these classifications are segregated, and the rates for a particular classification
are calculated purely from that classifications experience. Thus, there would be no
effect on the rates and premiums of traditional marine industries by any change implemented here.
I am convinced that transferring these businesses to the state workers compensation system and enforcing the State Workers Compensation Acts, as only the states
have the power to do, will mean that tens of thousands, and possibly hundreds of
thousands of workers, will acquire coverage where there is none today. In addition,
it will provide an economic boost to employers, allowing them to expand their operations and hire new employeesall while leaving the traditional Longshore employees unaffected.
In conclusion, I strongly encourage this committee to amend the Longshore Act
to further expand the 1984 amendments by removing the recreational marine industry in its entirety from under LHWCA. If enacted into law, this will rationalize the
state workers compensation coverage in the recreational marine industry that Congress began in 1984.
Workers will not be harmed. Instead they will be benefited by more universal coverage.
Thank you.
[An attachment to Mr. Greenways statement follows:]
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Vice-Chairman BIGGERT. Thank you, very much.I21We will now

move to the question-and-answer period, and I yield myself 5 minutes.
Mr. Greenway, you noted that there is no difference in the risks
associated with preparing the plumbing, air- conditioning, or radio
on a 75 foot recreational vessel as compared to a 65 foot vessel.
Can you compare the number and degree of seriousness for injuries
that you see occurring in vessels over 65 feet with those that are
less than 65 feet?
Mr. GREENWAY. The rating organization that monitors all these
statistics, keeps statistics for vessels under 65 feet, and vessels between 65 foot and 150 feet. The claims on those are shown to be
at least 38 percent lower than vessels over 65 foot, 65 foot to 150
foot range.
25
As Mr. Nelson has already said, it is just easier to work on a
larger vessel. Theres more space, theres more time, theres more
money involved, quite frankly, from the owner to be that safe, and
to take the more, higher degree of care thats necessary.
Vice-Chairman BIGGERT. Thank you. Looking at the law, it appears that the Longshoremens insurance was put in to make sure
that there was no gap in coverage, that everyone that would be
working on some type of vessel would be provided with insurance.
This wont happen, of course, but lets say we repealed the Longshoremens Act, and so that there was no insurance, looking then
at the vessels that are 65 feet and over, would there be any gap
in coverage? Ms. Hebert?
Ms. HEBERT. Well, I mean, I cant speak for the insurance industry. As far as my workers, maybe the question is, how I do with
it? Some days, Im just wondering if there is anyone who would not
receive this State workers compensation. You know, I dont have
themaybe I can yield that to Ian, as far as, you know, the State
compensation.
As far as in Florida, the goal would be to have everyone covered
under State compensation. I think that we are equal to our landbased partners. The work that we provide, for example, I am sure
Mr. McGarrah formerly with NCCI, which is the National Council
on Compensation Insurance, for a company like mine, Marine Electric, there is no classification for Marine Electric. We are electricians, and so we are classified the exact same. For my company,
no, they would all would be covered, and in fact, the classification
wouldnt change, they would just fall right to the same classification, my insurance numbers would not even change, other than this
multiplier that he mentioned, has dropped. All of our workers
would be the same and NCCI consider us in our risks equal to our
land-based partners.
Vice-Chairman BIGGERT. OK.
Mr. NELSON. May I also address the question?
Vice-Chairman BIGGERT. Sure.
Mr. NELSON. Yes, but we did our research, and looked into this,
one of the things that we discovered is that there are a few states
that dont necessarily require workers compensation.
And I think that one of the things that we would favor, is that
the bill were structured in a way, and maybe it could be done during markup, is that an employer would have to provide Longshore
insurance if there was no State compensation available, to keep
people from falling through the cracks.
Vice-Chairman BIGGERT. I mean that was the intent of the law.
Mr. NELSON. That was the intent of the law.
Vice-Chairman BIGGERT. Right.
Mr. NELSON. And thats our intent too.
Vice-Chairman BIGGERT. Mr. McGarrah.
Mr. MCGARRAH. Yes, Madam Chair.
The State of New Jersey specifically excludes workers in the marine industry, so they would have no coverage, unless the State
amended state law. Historically, the United States has always provided for Federal coverage for workers operating airports and harbors. That goes way back to the early days of the republic. And for
Congress to throw workers back into the State system, especially
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when the states are not providing any coverage whatsoever, would
be an historic reversal of Federal maritime policy and would, frankly, as I had indicated, contrary to what Mr. Greenway stated,
would throw workers into poverty.
The average temporary total disability payments, Im talking
about average payments, this was a study by the National Academy of Social Insurance, would put many workers below poverty,
in State workers compensation systems and only marginally above
poverty. Thats the major concern here.
And thats one of the major reasons in this very wealthy industry, with multimillion dollar yachts being found in ports everywhere, and were all for multimillion dollar yachts, if we can afford
themworkers simply cant live in poverty, and get better and get
back to work. Thank you.
Vice-Chairman BIGGERT. Mr. Greenway.
Mr. GREENWAY. I think that, when we look at the original or the
Longshore Act as it stands today, it provides a beautiful caveat to
draw people back into Longshore if there is no State compensation.
Section 9023 says, if individuals described in clauses (a) through
(f), thats the exclusionary language, are subject to coverage
underare subject to coverage under State workers compensation
law.
It simply says there, that those exclusions disappear if there is
no State act coverage in force.
Vice-Chairman BIGGERT. Thank you.
Mr. GREENWAY.coverage in force.
Vice-Chairman BIGGERT. Thank you.
My time is expired, and that would yield 5 minutes to the gentleman from California, Mr. Miller.
Mr. MILLER. OK.
Vice-Chairman BIGGERT. Youre not used to sitting in that position.
Mr. MILLER. Thank you, very much, and thank you for your testimony.
I must say, and this will come as a surprise to you, but Im not
persuaded yet, that the answer is simply to do away with the
Longshore coverage.
You describe an industry you suggest is among the safest, and
that would suggest to me, as very often is the case we have a rating problem here, where we have a cost problem, and the insurance
industry very often is not about insurance coverage, it is about insurance investments, and the cycles that they go through.
It appears that after the pounding that they took in the beginning of this decade, in 2000, and rates escalated across the country
for many lines of insurance and are now starting once again to
come down. And I dont quite get that the answer is that we would
uncover these workers for what I think is, in fact, in many instances and in many states, an inferior line of coverage in terms
of the benefits to those workers.
And I spent a lot of time in boat yards and in shipyards, and I
guess, youre saying that the statistics show that somehow this is
much safer. If it is so safe, I am not quite sure why the rates are
so high. Mr. Greenway has a theory on that. And yet at the same
time, when I walk around many of these large yachts, and we cer-
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tainly dont do the largest in my area, the very, very large yachts,
very expensive yachts, I dont know, the distance to the ground is
a lot further off the bow of these yachts when they put up on the
waves, than it is from, you know, a small recreational boat or what
we used to think was even a larger recreational boat. Its a different experience in terms of that.
And I just dont quite get that the answer here is to retract this
coverage from those individuals. And I appreciate this Committee
struggles all the time with both work and manufacturing and jobs
that are going overseas. But it is hard for me to believe that differential is in the Longshore wage here.
I realize that you have to add up all of your total costs. But if
the differential is $5 million a yacht, I dont think thats about
Longshore, and the suggestion is a cost of labor. Well, if you look
at the cost of labor, if you offer those prices, you wouldnt get anybody to work in your yards, forget whether they are covered are
not. I mean, they are not going to work for $160 month. They are
not going to work for $400 a month, you know, to get to the skill
that you, I assume, you need to keep your customers, and to add
new ones.
Im just struck that this is the focal point for a series of problems, whether it is insurance rating, or whether it is competition,
that suggest that somehow this is the answer. I would be happy
to have you respond.
Mr. NELSON. I would love to. Thank you. I think that you hit it
right on the head. We cant get a worker to work for a $160 a
month. And we cant get our customers to spend
Mr. MILLER. I understand that. Most people in the United States
arent going to live like people live in China working in those industries.
Mr. NELSON. And we wouldnt want to.
Mr. MILLER. Thats my point.
Mr. NELSON. Were trying to maintain and grow our business,
pay family wage jobs, the overseas competition isnt doing that.
Our customers are not going to pay an additional $3 million to $4
million for a boat, so that they can buy from us.
Mr. MILLER. Well, for now, there was a story on Tuesday where
they said nah, thats an interesting boat, but the quality is not that
much different to look at.
Mr. NELSON. And look where
Mr. MILLER. I understand, and I believe that is only a matter of
time, before the quality
Mr. NELSON. Our market share has been cut in half. That work
is going elsewhere. And for a number of reasons. And Longshore
is not the only reason. The reason is that we pay some of the highest wages and industry , in the world. And we want to continue to
do that.
Mr. MILLER. And when those people are injured, they ought to
be compensated at a level that has something to do with their
standard of living they had while they were working before they
were injured.
Mr. WILSON. Absolutely. And workers
Mr. MILLER. And thats not what workers compensation does, in
many, many, many, states. It just doesnt do that.
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Ms. HEBERT. If I could comment on that. As I mentioned, one of
my other capacities is that I am Vice President, actually Chairman
Biggert mentioned that, I am Vice President of the Marine Industries Association of South Florida. I have been Chair of the
Longshore Taskforce. We didnt even call it a committee for years.
And one thing that we did, and we went out, as you know South
Florida is the yachting capital the world. You know, obviously
thats what people imagine, people imagine lots of wealthy people
sitting around. But the reality is that our industry generates more
dollars in the state than the citrus, and that we create more jobs,
and generate more money.
This is about the small working families. We did a work-study
in South Florida, clearly one of the biggest places you would want
to go in the country to have work done on your boat. We did a work
surveylets go to all the yards, lets go to all the marinas, my
company was included, what are the wages, what are the wages
and salaries of people.
We went from the deck hand to the boat washer, to the service
manager, on, on, and on. And what we found, and we have this,
what we found is that all positions fell well within the salary caps
of the state compensation system. We do not have people making
the salaries of the Longshore and stevedores. And our employees
are not working at the ports. We are working inland. My company
doesnt even work on the water, I mean, we drive in vans, you
know, to wherever it is. You know, our facilities are not located at
the port, theyre down the river. And the experiences and environments that are there are not the hazardous, things you are imagining at the port.
So I would beg to differ. In Fort Lauderdale, which is not one of
the cheapest places to live in this country. If our salaries can fall
well within state compensation, which Im sure the industryinsurance industry would love to comment on the Florida State workers compensation policies, are not exactly the most generous, they
do fall well within, and theyre not going to be a poverty level.
Mr. MCGARRAH. Well, Mr. Miller, if I could just add two points.
One is, the injury rates in this industry are double the average injury rates, according to the Bureau of Labor Statistics. The average
national injury is about 5.3 per 100 full-time workers. This boat
building industry is 11.1 per 100 full-time workers. This is a booming industry, and a Nexis search of just the companies represented
here on this panel, with my colleagues here, shows theyre all going
very well, thank you and have expansion plans and doing well selling yachts, and as I say are, upwards $10 millionsome of them
even more into the $30 million range. Thats why we find it quite
preposterous that there would be a suggestion that Federal
Longshore rates, which are paying living wage while people are recovering from injuries, ought to be eliminated, and put workers
into rates in a states that a well below poverty.
But what we think here, frankly, is in overreaching on the part
of this very competent industry. And perhaps, some misinformation
from the insurance companies that are servicing them. Because the
insurance industry, as we all know, and as the Wall Street Journal
documents in a front-page story today in the Money and Investing
section, the industry made many major pricing decisions that came
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home to haunt it when the market collapsed. And that is why rates
had to go up across the board for property, casualty insurance.
Workers compensation is no exception.
A closer examination of rates, as they do in the Commonwealth
of Virginia, which show that the industry frequently, as frankly
many other financial services industries have, have priced their
products in ways that are less than truthful, and less than candid.
And the Commonwealth of Virginia catches errors all the time in
the pricing practices. I would urge my colleagues to join with us,
in labor, and properly examining and calling for transparency
among insurers in the property-casualty insurance industry. Its a
critically important part of our economy. Its necessary for all of us
to do business. But we have got to have truth in the pricing of the
insurance product. We dont have that now.
Vice-Chairman BIGGERT. The gentlemans time has aspired. The
gentleman from Florida, Mr. Keller, is recognized for 5 minutes.
Mr. KELLER. Thank you, Madam Chairman.
I want to briefly address a couple of things. The Ranking Member, Honorable George Miller, said that he is not yet persuaded.
Well, perhaps it is because of my youth and experience, but I am
not giving up on him on this issue. I am respectful of the fact that
he was actually here in 1984 when these amendments were adopted. Therefore, I havent pretended to tell him what his intent was.
I have been respectful of the that fact that you, and you alone,
know what you intended.
I21But I looked it up, and you were the Subcommittee Chair,
and it passed by a voice vote. And because you put that 65 foot rule
in, you made a very positive difference for the recreational marine
industry that would not have happened.
I wanted to get the support of folks like you, Martin Frost and
Rob Andrews and Jim Davis, and so there is, specifically, there is
no union bashing in this bill. Theres nothing to do with collective
bargaining, there is no tort reform stuff. I wanted to have a common sense bill that would be noncontroversial.
So in the interests of optimism, let me directly address something that I hope would persuade you and some others. In California, if you were injured and you were a Longshoreman, and by
the way let me point out, this bill does nothing to impact the coverage for Longshoreman. They have the Longshore insurance before, and they have the Longshore insurance after.
But if you, lets say are a recreational person, and you are working on a boat and you were injured, under Longshore insurance you
get 66 and two-thirds percent. Under California State workers
compensation, you get 66 and two- thirds percent.
I would suspect the AFL-CIO witness would point out then do
you, yes, but under the total maximum amount, under Longshore,
you get $1030, and under California $728. And so, let me just address that directly, show you why it doesnt really have the hurt
that you think it does.
If you look at a particularly high paid worker on a recreational
boat, a diesel mechanic who makes $20.38 an hour, and that comes
out to $815.20 a week. And in a 40 hour week, the employer will
be required in California, to pay 66 and two thirds percent, just
like in Florida. And that equals $543, well within Floridas max-
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30
imum cap, well within Californias maximum cap, the same
amount.
So its really no attempt to push workers out of coverage or to
give them inferior coverage, not at all. Now, one of the things that
came out from Mr. McGarrahs testimony was sort of like this is
just something to help rich folks, you know, and they could help
themselves.
So let me just, rather than leave that unanswered, lets just address directly. Ms. Kristina Hebert, are you a billionaire?
Ms. HEBERT. No.
Mr. KELLER. Do you spend your free time hanging out with Donald Trump?
Ms. HEBERT. No.
Mr. KELLER. Do you own a 250 foot yacht?
Ms. HEBERT. No.
Mr. KELLER. OK, do you have a small family business?
Ms. HEBERT. Yes.
Mr. KELLER. OK, tell me how many people your company employees?
Ms. HEBERT. Forty-two.
Mr. KELLER. Forty-two, and you say this company will save
about $200,000 a year, if we pass this legislation?
Ms. HEBERT. Yes.
Mr. KELLER. OK, just to address for cynics, are you going to take
this $250,000 a year and just upgrade, and buy a place in Palm
Beach. Or are you going to use this to hire more employees?
Ms. HEBERT. No, we would actually use it hire more employees.
Mr. KELLER. Now, we havent sworn you in, but if you were
sworn in under oath, you would say the same thing, that you were
going to use this to hire more employees and create more jobs?
Ms. HEBERT. Yes.
Mr. KELLER. One of the things that you said intrigued me, you
were talking about how expensive it was, essentially for a skilled
worker, workforce hour of $75 an hour, and most of the money
would actually go to pay for the Longshore insurance. And you said
something to the effect, that because of the high cost of Longshore
insurance, some of employers are just going bare. Are you suggesting that if we didnt have the Longshore requirement, for the
recreational folks, that actually there would be more workers with
insurance coverage?
Ms. HEBERT. Thats exactly what I am suggesting in a way, you
know, Im not an insurance professional. But we, as I mentioned,
are a parts distributor. And so, in addition to providing service
work, we provide parts for other contractors that are out there
doing work, that I know, that are underbidding us.
And they are doing this because they cannot afford Longshore
coverage. When youre looking at a one or two man show, that
makes $30,000 a year, and youre asking them for $25,000 up-front
in insurance, theyre going to say, sorry, I cant do it, and theyre
going to work illegally.
But I would guarantee that they all would want to provide coverage for their workers. Thats what they want to do with it.
Mr. KELLER. OK, one final one. I want to question, Mr. Greenway real quick.
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Mr. McGarrah keeps talking about the injury rates for workers,
but I think hes blurred the recreational workers with the ship
workers. For example, he highlights the testimony of the Bureau
of Labor Statistics that the boat building and repair industry has
one of the most hazardous site injury rates of 11.1 per 100 full-time
workers. He doesnt state that these rates are priced into the premiums set by issuers for workers compensation.
Are you familiar with this statistic, and is this statistic for the
entire boating industry, or does there need to be a distinction between the commercial ships and the recreational boating?
Mr. GREENWAY. I have not seen that number before, but there
clearly is a big difference between the shipbuilding industry and
the boatbuilding industry. And even within the boatbuilding industry, between the under 65 and the over 65.
Shipbuilding and stevedores, are considered to be twice to three
times the numbers of claims the boat builder has. And even within
the boatbuilding category, you have a 38 percent statistic from
NCCI, which shows that it is 38 percent lower for over 65 foot because of the space available.
I would also like to add though that the coverage issue, I think,
is very important. Most states, Florida, California, right now, are
doing huge clampdowns on businesses in the states that are not
providing workers compensation insurance because the way
Longshore is written, the states have no power to go in and enforce
Longshore insurance.
So these employers that are going around without anything, they
are claiming that I can take a choice, I can only take the risk of
going bankrupt when the claims happen, or I can take the risk for
a certainty for going bankrupt now. That means that nobody has
a job. Nobodys got benefits. They get left out there in the cold.
Mr. KELLER. Thank you, Madam Chairman. My time has expired.
Vice-Chairman BIGGERT. Thank you, Mr. Keller. The gentleman
from New Jersey, Mr. Payne, is recognized.
Mr. PAYNE. Yes. Thank you, very much.
This is certainly a very important issue. I think some of the
issues go beyond your industry, and I dont know how we in the
U.S. are going to contend with the fact that China produces things
more cheaply. I guess, the answer is either reduce wages, which of
course is happening anyway, actually, which is a bad trend, or,
that we, I guess, move out of that industry, which is not good for
the American worker. However, weve seen a number of industries
totally decimated by the fact that corporations seem not toyoure
not a corporation, but multinational corporations seem not to have
any borders, thats for sure. And the capital just flows with the
push of a computer button.
And so I think some of the problems that youre finding here,
really is going to be a dilemma, that we as a nation will have to
come to grips with itIm not running for President, so I dont
have to come up with the answer. But youre talking about, of
course, $10 million for a ship here and $7 million for one built in
China. I think we have to just take a look at how we come up with
technology to reduce our costs.
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We have been able toif we took that philosophy, we would
make more automobiles in the United States, because automobiles
are made in Brazil, theyre made in China, they are made in Namibia, as a matter of fact. And so if our philosophy is simply going
to be that we have to ratchet down hourly wages, or our insurance
coverage, orthen we are in trouble, because youre not going to
be able, you know, it first started with T-shirts and underwear, you
know, that was all right, and that was sort of sweatshop stuff here
anyway. And so we dont make it any more, Fruit of the Looms
here.
But then it comes into other industries, and so I really dont, you
know, have an answer for this problem, this dilemma. I think that
what were going to have to do is to make a better product, somehow use the creativity of the American worker, who I believe is the
best worker in the world. And somehow, perhaps, have corporations have some, some loyalty to the U.S.
I know that it might sound high-falutin, but you see there was
not too much concern about the loss of manufacturing jobs, like it
wasthe apparel business, the clothing lines, that sort of thing.
Of course, then it started to move to automobiles, and we kind
of fought back. As a matter of fact, there was a lackadaisical attitude on the part of the workers in the corporations in the U.S.
until the foreign cars went longer and lasted longer, got better efficiency, and so the companies decided, well, we got to compete. And
so, the American car now is almost, nearly as efficient and fuel as
Japanese cars. Its just that the corporations were lazy. We just
had it made. We didnt have to come up, the profits were great, so
lets just sit down and make the profits.
Now, weve got to put money into research and development. I
think that we can do that in all industries. The fact now, though,
that others are getting concerned, we didnt bother higher income
people because like we said they didnt work in making T-shirts
and those kinds of apparel and dungarees.
But now I do hear my colleagues and friends who are the architects, who are little concerned now because what theyre doing and
some major cities is that theyre sending to India or China perhaps
even, or other places some kind of a description of a building that
they would like to be built, and you know, these architects in India
are sending back the building design. And so now its actually
starting to impact on the upper income, the professionals. Now
were starting to hear the concern.
We hear that physicians are plugged into medical devices in
India somewhere, or in the Bahamas, and as that person goes
through the CT scan, someone over there that is making half the
price, is coming up with the, who has the same kind of education,
and knows what the CT-scan says, is coming back with the diagnosis for the illness.
So this is going to be something that is not about sweatshirts
anymore, its about all kinds of industries. The old philosophy was
that as the Third World kind of starts to manufacture low-priced
things that well be able to sell them more high-tech. Well, the
problem is now that the high-tech stuff is being over there too.
So weve got some very substantial problems. I dont have any
questions. But I would hope that were not trying to ratchet our-
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selves down to compete on that level, but make a better mousetrap
as they say, and people will make a beaten path to your doorway.
Vice-Chairman BIGGERT. And with that, the gentlemans time
has expired. The gentleman from Minnesota, Mr. Kline.
Mr. KLINE. Thank you, Madam Chair.
Thank you all, witnesses, for being here today, your excellent testimony, your patience in answering our questions, just a couple of
comments.
I certainly want to thank my colleague to my immediate right
here for authoring this bill. I think its the right thing to do. It
seems to me, incredibly arbitrary that we have picked a foot length
of 65 feet. It could have been 60, or 20, or 80, or 90. What we have
here is the difference between making recreational boats and building ships. And that seems to be perfectly clear to me.
Im very much in support of the bill, and I think its the right
thing to do. I especially want to thank Ms. Hebert and Mr. Nelson.
Youre doing exactly what we love to see in this country. Youre creating jobs, good jobs, high- paying jobs. Youre expanding opportunities for Americans, and theyre taking advantage of it. I am
pleased with you, and Im pleased with the industry. This is an
American industry that is doing very well, and we dont want to
penalize that industry, and see those jobs move elsewhere. We
want good jobs for Americans with good pay, and youre just doing
one heck of a job.
So thank you very much. Thank all of you for being here to testify today. And with that, I yield back, Madam Chair.
Vice-Chairman BIGGERT. The gentleman yields back. I wish to
thank the witnesses for their valuable time and excellent testimony
and the Members for their participation.
If there is no further business, the Subcommittee stands adjourned. Thank you.
[Whereupon, at 11:18 a.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Statement of Hon. Dennis J. Kucinich, a Representative in Congress from
the State of Ohio
The Recreational Marine Employment Act of 2003 will have a negative impact on
many workers in the state of Ohio. Removing recreational workers from the protection provided by the Longshoremen and Harbor Workers Compensation Act
(LHWCA) would leave them at a disadvantage. A worker in Ohio, for example,
would receive $315.00 less for a temporary disability under the maximum weekly
payment allowed in the state compensation program. Similar disparities between
LHWCA and state compensation benefits exist for both permanent disabilities and
death benefits as well.
Ohio is not alone in this inequality. Many other states also have state compensation laws that would provide fewer benefits for workers than the LHWCA would.
In fact, the temporary disability benefits in fifteen states are below the poverty
threshold. It is completely unacceptable for a family to be forced into poverty due
to a temporary injury.
Proponents of this legislation argue that it will be a catalyst for developing more
jobs and helping small businesses. We cannot develop businesses interest on the
backs of workers. It is our duty to protect workers and ensure that if an on the job
injury occurs, they will receive the necessary compensation. The Recreational Marine Employment Act of 2003 places an unnecessary burden on workers.
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House Hearing, 108TH Congress - H.R. 1329, Recreational Marine Employment Act of 2003

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House Hearing, 108TH Congress - H.R. 1329, Recreational Marine Employment Act of 2003

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H.R.

SUBCOMMITTEE ON WORKFORCE PROTECTIONS

July 15, 2004

Serial No. 108-69

U.S. GOVERNMENT PRINTING OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office

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COMMITTEE ON EDUCATION AND THE WORKFORCE

George Miller, California

Paula Nowakowski, Staff Director

SUBCOMMITTEE ON WORKFORCE PROTECTIONS

Major R. Owens, New York

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Hearing held on July 15, 2004 ...............................................................................

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H.R. 1329, RECREATIONAL MARINE

The Subcommittee met, pursuant to notice, at 10:10 a.m., in

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Mr. KELLER. Well, thank you, Madam Chairman. And I want to

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Vice-Chairman BIGGERT. Thank you very much.

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Mr. OWENS. Thank you very much.

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Ms. HEBERT. Good morning. Madam Chairperson, and Ranking

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Vice-Chairman BIGGERT. Thank you very much.

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Direction DIR 0201 (CPL 2), January 23, 2002.

Vice-Chairman BIGGERT. Thank you, very much.

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Mr. MCGARRAH. Thank you very much, Madam Chairman and

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